x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended March 31, 2013

OR

¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______
to _______

Commission file number 33-20432

KIWIBOX.COM, INC.

Formerly known as Magnitude Information
Systems, Inc.

(Exact Name of Registrant as Specified
in its Charter)

Delaware

75-2228828

(State or other Jurisdiction of

(IRS Employer Identification No.)

Incorporation or Organization)

330 West 38 St. Suite 1602 New York, NY 10018

(212) 239-8210

(Address of Principal Executive Office) (Zip Code)

(Registrant’s telephone number including area code)

Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.: Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated
filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
(Check one):

The accompanying notes
are an integral part of the financial statements.

3

Kiwibox.Com,
Inc. and Subsidiary

Condensed Consolidated
Statements of Operations (Unaudited)

Three Months Ended March 31,

2013

2012

Net Sales

Advertising

$

268,253

$

423,979

Other

48,547

38,658

Total Net Sales

316,800

462,637

Cost of Goods Sold

Website hosting expenses

232,706

324,575

Total Cost of Goods Sold

232,706

324,575

Gross Profit (Loss)

84,094

138,062

Selling expenses

158,435

322,730

General and administrative expenses

285,213

349,867

Loss From Operations

(359,554

)

(534,535

)

Other Income (Expense)

Miscellaneous income

5,263

15,549

Interest expense

(229,085

)

(106,072

)

Interest expense-derivative conversion features

(512,411

)

(954,421

)

Loss on extinguishment of debt

(40,000

)

-

Amortization – debt discount

(8,333

)

(4,167

)

Change in fair value – derivative liabilities

614

(318,663

)

Total Other Income (Expense)

(783,952

)

(1,369,774

)

Loss Before Benefit (Provision) for Income Taxes

(1,143,506

)

(1,904,309

)

Benefit (Provision) for Income Taxes

(650

)

33,177

Net Loss

$

(1,144,156

)

$

(1,871,132

)

Dividends on Preferred Shares

(12,816

)

(12,816

)

Net Loss Applicable to Common Shareholders, basic and diluted

$

(1,156,972

)

$

(1,883,948

)

Net Loss Per Common Share, basic and diluted

$

(0.002

)

$

(0.004

)

Weighted Average of Common Shares Outstanding

679,941,393

522,090,046

Comprehensive Income (Loss):

Net Income (Loss)

$

(1,144,156

)

$

(1,871,132

)

Foreign currency translation adjustment

62,777

30,071

Total Comprehensive Income (Loss)

$

(1,081,379

)

$

(1,841,061

)

The accompanying notes are an integral part of the financial
statements.

4

Kiwibox.Com, Inc.
and Subsidiary

Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,

2013

2012

Cash Flows From Operating Activities

Net Loss

$

(1,144,156

)

$

(1,871,132

)

Adjustments to Reconcile Net Loss to Net Cash Used by Operations

Depreciation and amortization

66,774

93,080

Value of stock for services

-

13,500

Change in fair value – derivative liabilities

(614

)

318,663

Intrinsic value of beneficial conversion feature

512,411

956,421

Deferred tax expense

-

28,612

Loss on extinguishment of debt

40,000

-

Decreases (Increases) in Assets

Accounts receivable

(4,801

)

83,550

Income taxes receivable

-

(105,517

)

Other receivables

2,469

37,740

Prepaid expenses

52,376

(54,598

)

Increases (Decreases) in Liabilities

Bank overdraft

(49,300

)

214,370

Liabilities to be settled in stock

10,620

10,620

Accounts payable

47,118

(80,330

)

Accrued expenses

239,490

126,594

Net Cash Used by Operating Activities

(227,613

)

(228,427

)

Cash Flows From Investing Activities

Cash outlay – website development costs

(892

)

-

Cash proceeds (outlay) – other assets

(7,025

)

1,000

Purchases of property and equipment

-

(780

)

Net Cash Provided (Used) by Investing Activities

(7,917

)

220

Cash Flows From Financing Activities

Proceeds from loans/notes payable

145,000

894,251

Net proceeds (repayments) to related parties

66,845

(147,783

)

Payments on acquisition indebtedness

-

(664,251

)

Net Cash Provided by Financing Activities

211,845

82,217

Net Increase (Decrease) in Cash

(23,685

)

(145,990

)

Effect of exchange rates on cash

1,650

(1,238

)

Cash at beginning of period

56,751

195,613

Cash at end of period

$

34,716

$

48,385

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Interest Paid

$

1,486

$

737

Income Taxes Paid

$

650

$

38,540

The accompanying notes are an integral part of the financial
statements.

5

Kiwibox.Com, Inc. and Subsidiary

Consolidated Statements of Cash Flows
(Unaudited)

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Three Months Ended March 31, 2013

Settlement of obligations with common stock

$

10,500

Quarter to date dividend accruals

$

12,816

Settlement of bank debt with short term loan

$

115,344

Three Months Ended March 31, 2012

Settlement of obligations with common stock

$

16,297

Conversions of debt

$

581,269

Quarter to date dividend accruals

$

12,816

Reduction of derivatives from conversion of debt

$

567,915

Debt discount created from derivative instrument

$

50,000

6

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Organization

Kiwibox.Com, Inc. (the “Company”)
was incorporated as a Delaware corporation on April 19, 1988 under the name Fortunistics, Inc. On November 18, 1998, the Company
changed its name to Magnitude Information Systems, Inc. On December 31, 2009, the Company changed its name to Kiwibox.com, Inc.

On August 16, 2007
the Company acquired all outstanding shares of Kiwibox Media, Inc.

The Company, Magnitude, Inc.
and Kiwibox Media Inc. were separate legal entities until December 31, 2009, with Kiwibox Media, Inc. being a wholly owned subsidiary.
On December 31, 2009, the two subsidiaries, Magnitude, Inc. and Kiwibox Media, Inc. merged into the Company.

On September 30, 2011, Kiwibox.com
acquired the German based social network Kwick! Community GmbH & Co. KG (“Kwick”), a wholly-owned subsidiary.

Cash and Cash Equivalents

The Company accounts for cash
and other highly liquid investments with original maturities of three months or less as cash and cash equivalents.

Principles of Consolidation

The consolidated financial statements
as of and for the three months ended March 31, 2013 and as of December 31, 2012 include the accounts of Kiwibox.com, Inc. and
its subsidiary, KWICK! Community GmbH & Co. KG. Any significant inter-company balances and transactions have been eliminated.

Depreciation and Amortization

Property and equipment are recorded
at cost. Depreciation on equipment, furniture and fixtures and leasehold improvements is computed on the straight-line method
over the estimated useful lives of such assets between 3-10 years, or lease term for leasehold improvements, if for a shorter
period. Maintenance and repairs are charged to operations as incurred.

Foreign
Currency Translation

Assets and liabilities of foreign
operations are translated into U.S. dollars at the rates of exchange in effect at the balance sheet date. Income and expense items
are translated at the weighted average exchange rates prevailing during each period presented. Gains and losses resulting from
foreign currency transactions are included in the results of operations. Gains and losses resulting from translation of financial
statements of our foreign subsidiary operating in a non-hyperinflationary economy are recorded as a component of accumulated other
comprehensive loss until either sale or upon complete or substantially complete liquidation by the Company of its investment in
the foreign entity. Accumulated gain or (loss) on foreign currency translation adjustment was
$(46,570) through March 31, 2013.

7

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1.

SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Continued

Advertising Costs

Advertising costs are charged to operations
when incurred. Advertising expense was $42,177 and $5,452 for the

three months ended March 31, 2013 and 2012,
respectively.

Evaluation of Long
Lived Assets

Long-lived assets are assessed
for recoverability on an ongoing basis. In evaluating the fair value and future benefits of long-lived assets, their carrying
value would be reduced by the excess, if any, of the long-lived asset over management’s estimate of the anticipated undiscounted
future net cash flows of the related long-lived asset.

Fair Value Measurements

The Company adopted the provisions
of ASC 820, Fair Value Measurements and Disclosures, which is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Under ASC 820, a framework was established for
measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.
The Company accounted for certain convertible debentures issued in the year ended December 31, 2012 and the three months
ended March 31, 2013 as derivative liabilities required to be bifurcated from the host contract in accordance with ASC 815-40,
Contracts in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in
the note principal and related accrued interest being converted to a variable number of the Company’s common shares (see
Note 12).

Securities Issued for Services

The Company accounts for stock,
stock options and stock warrants issued for services and compensation by employees under the fair value method. For non-employees,
the fair market value of the Company’s stock on the date of stock issuance or option/grant is used. The Company has determined
the fair market value of the warrants/options issued under the Black-Scholes Pricing Model. The Company has adopted the provisions
of ASC 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged
for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on
the fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting
period of the equity grant).

Reclassification of Certain
Securities under ASC 815-15

Pursuant to ASC 815-15, “Contracts
in Entity’s own Equity”, if a company has more than one contract subject to this Issue, and partial reclassification
is required, there may be different methods that could be used to determine which contracts, or portions of contracts, should
be reclassified. The Company's method for reclassification of such contracts is reclassification of contracts with the latest
maturity date first.

8

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1.

SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Continued

Capitalization of Software
/Website development costs

The Company capitalizes outside-contracted
development work in accordance with the guidelines published under ASC 350-50, “Website Development Costs”. Under
ASC 350-50, costs incurred during the planning stage areexpensed, whilecosts relating to software used to operate a web site or for developing initial graphics should
be accounted for under ASC 350-50, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,
unless a plan exists or is being developed to market the software externally. Under ASC 350-50, internal and external costs incurred
to develop internal-use computer software during the application development stage should be capitalized. Costs to develop or
obtain software that allows for access or conversion of old data by new systems should also be capitalized, excluding training
costs.

In July 2012, the FASB issued
ASU 2012-02, Intangibles- Goodwill or Other (Topic 350): Testing Indefinite-Living Tangible Assets for Impairment. ASU 2012-02
simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other
than goodwill by allowing an organization the option to first assess qualitative factors to determine whether it is necessary to
perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to
calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment,
that it is "more likely than not" that the asset is impaired. The amendments in this Update are effective for annual
and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption
of ASU 2012-02 did not have a material impact on our results of operations or our financial position.

Fees incurred for web site hosting,
which involve the payment of a specified, periodic fee to an Internet service provider in return for hosting the web site on its
server(s) connected to the Internet, are expensed over the period of benefit, and included in cost of sales in the accompanying
financial statements.

No costs were capitalized for
web-site development work during the three months ended March 31, 2013 and 2012.

Income Taxes

The Company provides for income
taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the
Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different
periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized
for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting
and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset
by a valuation allowance against the related federal and state deferred tax asset.

Net Loss Per Share

Net loss per share, in accordance
with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number
of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation since
the effect would be anti-dilutive. Such common stock equivalents totaled 515,422,134 common shares at March 31, 2013, comprised
of 64,031,315 shares issuable upon exercise of stock purchase warrants, 8,850,000 shares issuable upon exercise of stock options,
729,537 shares exercisable upon conversion of convertible preferred shares, and 130,523,954 shares potentially issuable upon conversion
of convertible debt. Such debt and the related accrued interest with principal totaling $9,008,699, convertible at the option
of five debt holders at a price of 50% of the average closing price for the preceding 10 days, and another holder at $0.025 per
share with certain amounts subject to reset, would yield in excess of 3.1 billion shares if fully converted at March 31, 2013.
However, the respective notes, all of which were issued to these investors, carry a stipulation whereby the number of all shares
issued pursuant to a conversion, may in the aggregate not exceed a number that would increase the total share holdings beneficially
owned by such investor to a level above 9.99%. At the end of the year, this clause limits any conversion to the aforementioned
number of shares. All of the aforementioned conversions or exercises, as the case may be, are at the option of the holders.

9

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

1.

SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, Continued

Revenue Recognition

The Company’s revenue
is derived from advertising on the Kiwibox.Com or Kwick. Most contracts require the Company to deliver the customer impressions,
click-throughs or new customers, or some combination thereof. Accordingly, advertising revenue is estimated and recognized for
the period in which customer impressions, click through or new customers are delivered. Licensing or hosting revenue consists
of an annual contract with clients to provide web-site hosting and assistance.

Use of Estimates

The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.

2.

GOING CONCERN

The ability of the Company
to continue its operations is dependent on increasing sales and obtaining additional capital and financing. Our revenues during
the foreseeable future are insufficient to finance our business and we are entirely dependent on the willingness of existing investors
to continue supporting the Company with working capital loans and equity investments, and our ability to find new investors should
the financial support from existing investors prove to be insufficient. If we were unable to obtain a steady flow of new debt
or equity-based working capital we would be forced to cease operations. In their report for the fiscal year ended December 31,
2012, our auditors had expressed an opinion that, as a result of the losses incurred, there was substantial doubt regarding our
ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary
if the Company were unable to continue as a going concern. Management’s plans are to continue seeking equity and debt capital
until cash flow from operations cover funding needs.

3.

CONCENTRATIONS
OF BUSINESS AND CREDIT RISK

The Company maintains cash
balances in a financial institution which is insured by the Federal Deposit Insurance Corporation up to $250,000. Balances in
these accounts may, at times, exceed the federally insured limits. At March 31, 2013, cash balances in bank accounts did not exceed
this limit. The Company provides credit in the normal course of business to customers located throughout the U.S. and overseas.
The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors
surrounding the credit risk of specific customers, historical trends, and other information.

4.

PREPAID EXPENSES

Prepaid expenses consist of the following at:

March 31, 2013

December 31, 2012

Consulting fees

$

50,000

$

100,000

Rent

4,529

11,427

Promotional supplies inventory

6,708

6,866

Business insurance

3,791

5,250

Other

11,606

5,467

$

76,634

$

129,010

10

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

5.

PROPERTY AND EQUIPMENT

Property and equipment consist
of the following at:

March 31, 2013

December 31, 2012

Furniture

$

14,322

$

14,322

Leasehold Improvements

24,130

24,130

Computer equipment

631,734

630,842

Equipment

73,138

73,138

743,324

742,432

Less accumulated depreciation

654,264

621,876

Total

$

89,060

$

120,556

Depreciation expense charged
to operations was $32,388 and $61,446 in the first three months of 2013 and 2012, respectively.

6.

INTANGIBLE ASSETS

Intangible assets consisted of software for website
development costs as follows:

March 31, 2013

December 31, 2012

Website development costs

$

392,660

$

392,660

Less accumulated amortization

310,173

248,121

Total

$

82,487

$

108,539

Amortization expense for the
three months ended March 31, 2013 and 2012 was $26,052 and $27,467, respectively. Additional amortization over the next 5 years
is estimated to be as follows:

Amortization expense

December 31, 2013

$

38,432

December 31, 2014

4,806

December 31, 2015

1,958

December 31, 2016

1,177

December 31, 2017

1,115

Thereafter

1,759

7.

ACCRUED EXPENSES

Accrued expenses consisted
of the following at:

March 31, 2013

December 31, 2012

Accrued interest

$

1,431,522

$

1,203,923

Accrued payroll, payroll taxes and commissions

48,260

51,944

Accrued professional fees

180,569

150,598

Accrued rent

12,150

12,158

Miscellaneous accruals

19,014

23,554

Total

$

1,691,515

$

1,442,177

11

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

8.

OBLIGATIONS TO
BE SETTLED IN STOCK

Obligations to be
settled in stock consisted of the following at

March 31,

December 31,

2013

2012

Obligation for warrants granted for compensation

$

100,000

$

100,000

600,000 common shares issuable to a consultant who was a director of the company, for services
rendered.

36,000

36,000

800,000 (2013) and 500,000 (2012) common shares, and 2,900,000 (2013) and 2,900,000 (2012) stock
options issuable to two officers of the Company pursuant to their respective employment Agreements

77,258

69,608

4,500,000 (2013) and 4,200,000 (2012) stock options issuable to one director who also serves
as the Company’s general counsel

The Company (formerly Magnitude,
Inc.) had borrowings under short term loan agreements with the following terms and conditions at March 31, 2013 and December 31,
2012:

On December 4, 1996, the company (formerly Magnitude, Inc.)
repurchased 500,000 shares of its common stock and retired same against issuance of a promissory note maturing twelve months
thereafter accruing interest at 5% per annum and due December 4, 1998. This note is overdue as of September 30,
2005 and no demand for payment has been made.

$

75,000

Total

$

75,000

12

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

10.

NOTES PAYABLE

March 31,

December 31,

2013

2012

Balance of non-converted notes outstanding. Attempts to locate the holder
of this note, to settle this liability, have been unsuccessful.

$

25,000

$

25,000

In January 2008 a shareholder loaned the Company $40,000 pursuant to which the Company issued
a demand note bearing interest at the rate of 5% per year. The note is convertible into stock and warrants (see
Note 12).

40,000

40,000

From September 2008 through March 2013 five creditors loaned the Company funds under the terms
of the convertible notes issued, as modified in March 2009 and July 2010 and April 2011 (see Note 12).

8,918,699

8,773,699

During March 2012, an individual loaned the Company funds under the terms of a convertible promissory
note at interest of 5% per year (see Note 12)

50,000

50,000

Less: debt discount on above note

(8,333

)

In January and again in February 2011, a shareholder loaned the Company
$50,000 under a demand note at 10%. In 2011, this shareholder loaned the Company $240,000 under a demand note at
10%.

340,000

340,000

Total

$

9,373,699

$

9,220,366

11.

LONG-TERM DEBT

Long-term debt as of March
31, 2013 and December 31, 2012 is comprised of the following:

Discounted present value of a non-interest bearing $70,000 settlement
with a former investor of Magnitude, Inc. to be paid in 24 equal monthly payments commencing July 1, 1997. The
imputed interest rate used to discount the note is 8% per annum. This obligation is in default.

$

33,529

Total

33,529

Less current maturities

33,529

Long-term debt, net of current maturities

$

-

13

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

12.

DERIVATIVE CONVERSION
FEATURES

On July 27, 2010, the Company
issued two Class A Senior Convertible Revolving Promissory Notes (“Class A Notes”), one to Cambridge Services, Inc.,
in the principal amount of $683,996, consolidating the series of loans (and related accrued interest) made to the Company since
June 26, 2009, and one to Discover Advisory Company, in the principal amount of $1,160,984, consolidating the series of loans
(and related accrued interest) made to the Company since September 19, 2008 and including advances through September 30, 2010.
Each of these promissory notes are due on demand, accrue interest at the rate of 10%, per annum, are convertible (including accrued
interest) at the option of each lender into Common Stock of the Company at 50% of the averaged ten closing prices for the Company's
Common Stock for the ten (10) trading days immediately preceding the Conversion Date but in no event less than $0.001 (the "Conversion
Price"). Both promissory notes contain conversion caps, limiting conversions under these notes to a maximum beneficial ownership
position of Company common stock to 9.99% for each lender. Each of these notes contains Company covenants, requiring the lenders’
prior written consent in order for the Company to merge, issue any common or preferred stock or any convertible debt instruments,
declare a stock split or dividends, increase any compensation to its officers or directors by more than five (5%) during any calendar
year.During the three months ended March 31, 2013 no debt was converted. During the three months ended March 31, 2012 Cambridge
Services, Inc. converted $581,269 and advanced $844,251 of which $664,251 was a payment towards the acquisition of Kwick!

The Company renegotiated certain
outstanding promissory notes with its four major creditors, Discover Advisory Company of the Bahamas (“DAC”), Kreuzfeld
Ltd. of Switzerland (“Kreuzfeld”), Cambridge Services, Inc. of Panama (“CSI”) and Vermoegensverwaltungs-Gesellschaft
Zurich LTD of Switzerland (“VGZ”). As of August 1, 2012, the Company authorized the issue of a new series of corporate
notes, the Class AA Senior Secured Convertible Revolving Promissory Notes, dated as of August 1, 2012 (the New Note(s)”)
and issued New Notes: (1) to DAC, with a maximum credit facility of $5,000,000 which replaced the Company’s outstanding
Class A Senior Convertible Revolving Promissory Note, dated July 27, 2010, in the original principal amount of $1,080,984, now
cancelled, which had an outstanding balance due (including accrued interest) of $3,629,836 as of December 31, 2012 and $3,709,275
at March 31, 2013; (2) to Kreuzfeld, with a maximum credit facility of $5,000,000 which replaced the Company’s outstanding
Class A Senior Convertible Revolving Promissory Note, dated September 16, 2011, in the original principal amount of $2,000,000,
now cancelled, which had an outstanding balance due (including accrued interest) of $3,911,338 at December 31, 2012 and $3,999,241
at March 31, 2013; (3) to CSI, with a maximum credit facility of $2,000,000 which replaced the Company’s outstanding Class
A Senior Convertible Revolving Promissory Note, dated August 1, 2011, in the original principal amount of $1,303,996, now cancelled,
with an outstanding balance due (including accrued interest) of $1,412,142 as of December 31, 2012, and $1,588,816 at March 31,
2013 and; (4) to VGZ, with a maximum credit facility of $2,000,000 which replaced the Company’s outstanding Class A Senior
Convertible Revolving Promissory Note, dated September 30, 2010, in the original principal amount of $2,000,000, now cancelled,
with an outstanding balance due (including accrued interest) of $877,963 as of December 31, 2012 and $896,998 at March 31, 2013.
All of the New Notes accrue interest at the rate of 10%, are convertible into common shares at the conversion rate equal to 50%
of the averaged ten closing prices for the Company's Common Stock for the ten (10) trading days immediately preceding the Conversion
Date but in no event less than $0.001, and are due on demand.. Pursuant to an Equity and Stock Pledge Agreement, also negotiated
and executed as of August 1, 2012, the repayment of the outstanding indebtedness of the New Notes is secured by all of the limited
partnership interests of the Pledgor’s wholly-owned German subsidiary, KWICK! Community GmbH & Co. KG, a private German
limited partnership (“KG”), and all of its shares of the sole general partner of KG, KWICK! Community Beteiligungs
GmbH.

On February
28, 2012 the Company signed a convertible note with Michael Pisani. This is a 1 year note that is convertible at $0.025 per share
in the amount of $50,000. In the event that any portion of any outstanding Company promissory note, preferred share, warrant or
stock option held of record by a non-affiliate of the Company is converted, exercised or exchanged for common shares of the Company
at a conversion price or conversion rate less than $0.025 per one (1) common share anytime any part of the outstanding principal
amount of this note is outstanding, the conversion rate of this note shall automatically be adjusted to such lower conversion
rate. The Company evaluated this conversion contingency under the guidance at ASC 815-40-15 and determined that this conversion
feature should be bifurcated from the host contract and measured at fair value. The Company valued this conversion feature utilizing
a Black-Scholes valuation model and a probability analysis with regard to the reset provision of the conversion price. The Company
determined the initial value to be $55,241, with $50,000 recorded as a debt discount and the remainder as interest expense-derivative
conversion features. The discount is being amortized over the life of the note. A total of $8,333 in amortization expense was
recorded during the three months ended March 31, 2013.

14

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

12.

DERIVATIVE CONVERSION
FEATURES (continued)

The Company accounted for
the conversion features underlying these convertible debentures in accordance with ASC 815-40, Contract in Entity’s Own
Equity, as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued
interest being converted to a variable number of the Company’s common shares. The Company determined the value of the derivate
conversion features of new debentures issued to these holders plus accrued interest during the three months ended March 31, 2013
under these terms at the relevant commitment dates to be $512,411 utilizing a Black-Scholes valuation model. The change in fair
value of the liability for the conversion feature resulted in income of $614 for the three months ended March 31, 2013, which
is included in Other Income (Expense) in the accompanying financial statements. The fair value of these derivative conversion
features was determined to be $14,309,476 at March 31, 2013.

In addition,
another demand note issued in 2008 and held by Michael Pisani in the amount of $40,000 was restructured to provide for a conversion
option. The note was modified to be convertible into stock and five year warrants (exercisable at $0.05) at a conversion rate
of $0.025 per share and per warrant. This debt modification resulted in a loss on debt extinguishment of $40,000 and a corresponding
recognition of a beneficial conversion feature underlying the new note. In March 2013, the two notes were further restructured
to provide for a structured repayment schedule, beginning with a payment of $35,000 in April 2013 and $14,000 per month thereafter
until all principal, accrued interest and certain legal costs are fully paid. If the Company defaults on any of the required payments,
the terms of the notes would revert back to the terms prior to the agreement.

13.

COMMITMENTS AND
CONTINGENCIES

We maintain offices for our
operations at 330 W. 38th Street, New York, New York 10018, for approximately 900 square feet. This lease requires minimum monthly
rentals of $2,199 plus tenants’ share of utility/cam/property tax charges which average approximately $400 per month. During
the 1st quarter of 2010 the Company successfully negotiated with the landlord to give up a lease of an office located
at the same address consisting of approximately 500 square feet. This lease was extended in December 2010 and again in April 30,
2011 through December 31, 2012 with no changes to the monthly rent. The company is currently operating with no formal lease agreement.

In May 2010 the Company negotiated
a lease of an apartment in New York City for the CEO in order to reduce travel costs. The lease was for 12 months at $2,775 per
month through May 31, 2011. In May 2011 the lease was extended through August 31, 2011 at the rate of $2,837. In August 2011 the
lease was extended through December 31, 2011 at the rate of $2,837 per month. In December 2011 the lease was again extended through
May 31, 2012 with no change in the base rent. In May 2012 the lease was extended through December 31, 2012 at a monthly rate of
$2,943, this lease was then extended through May 31, 2013 at the same terms.

Kwick! has operating leases
related to office space in Weinstadt, Germany along with vehicle leases.The office lease is for a term of one year expiring on
December 31, 2012 at the rate of $5,858 per month plus utilities. All operating lease contracts over 5 years contain clauses for
yearly market rental reviews. Kwick has a sublease arrangement with Jaumo GmBH a related party(see Note 14). Kwicks operating
leases relate to leases of land and vehicles with lease terms of between 3 and 5 years. All operating lease contracts over 5 years
contain clauses for yearly market rental reviews.The Company does not have an option to purchase the leased office at the expiration
of the lease period.

Our total rent expenses were
$27,740 and $20,562 during the three months ended March 31, 2013 and 2012, respectively.

15

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

13. COMMITMENTS AND CONTINGENCIES (continued)

During the third quarter of
2010 the Chief Technology Officer took over the position of Chief Executive Officer, and

entered into a consulting
agreement which provided for remuneration for services and expenses at the rate of $20,000 and 100,000 restricted shares per month,
running through July 30,2011. On October 6, 2010 the terms of the consulting agreement were modified. The new terms called for
a reduced monthly consulting fee of $16,667, and for $100,000 to be prepaid on January 1, 2011 covering the period January 1,
2011 thru June 30,2011.During the fourth quarter of 2011 this agreement was extended through December 31, 2012. During the fourth
quarter of 2012 this agreement was again extended through December 31, 2013 with the same prepayment provision. There were no
changes to the stock compensation portion of any earlier agreement.

In the three months ended March
31, 2013 and March 31, 2012 this officer was granted 300,000 shares.

On March 7, 2011 the Company
announced its acquisition of the assets of Pixunity.DE a German photo book community. We purchased the internet domain name, the
software codes for capturing, uploading and sharing images and the list of its approximate 15,000 members. The principal reason
for this purchase was to acquire the source code and technology for image sharing which could have cost us up to $100,000 to develop
this technology in house. We are currently integrating the image sharing software into our Kiwibox website and do not intend to
market or rely upon the pixunity brand for our business.

Kwick received a loan from
a private party in the amount of $115,344 plus accrued interest of $1,442. This loan carries a 6% rate of interest, is due on
demand and was used to pay off a bank line of credit.

14. RELATED PARTY TRANSACTIONS

During the three months ended
March 31, 2013 and 2012 one outside director of the Company who also serves as the Company’s general and securities counsel,
was paid an aggregate $12,927 and $15,000, respectively, for legal services. The director also received 300,000 common stock options
during the three month periods ending March 31, 2013 and 2012, valued at $2,970 and $2,970 respectively.

During the three months ended
March 31, 2013 and 2012 we incurred aggregate expenses of $63,442 and $36,662, respectively, to companies controlled by the Chief
Executive Officer, for website hosting, website development, server farm installations and technical advisory services.

Through March 31. 2013, approximately
9.99% of the voting stock was beneficially held by Discovery Advisory Company, located in the Bahamas, and Cambridge Services
Inc., Kreuzfeld, LTD and Vermoegensverwaltungs-Gesellschaft Zurich LTD. (VGZ) of Switzerland. Discovery Advisory Company, Cambridge
Services Inc., Kreuzfeld, LTD and VGZ are major creditors, having advanced operating capital against issuance by the Company of
convertible promissory notes during 2013, 2012 and 2011. During the three months ended March 31, 2013 Cambridge Services, Inc
advanced an additional $145,000. At March 31, 2013, $3,221,722 and $1,360,060 of such notes were outstanding and owed to Discovery
Advisory Company and Cambridge Services Inc, respectively and $3,564,959 and $771,958 owed to Kreuzfeld, Ltd. and VGZ, respectively.

16

Kiwibox.Com, Inc. and Subsidiary

Notes to Consolidated Financial Statements

15. FAIR VALUE

Some of the Company’s
financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value
due to their liquid or short-term nature, such as cash and cash equivalents, receivables and payables.

Effective July 1, 2009, the
Company adopted ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value for certain financial and
nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. This guidance supersedes all other accounting pronouncements that require or permit
fair value measurements. The Company accounted for the conversion features underlying certain convertible debentures in accordance
with ASC 815-40, Contracts in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures
could result in the note principal and related accrued interest being converted to a variable number of the Company’s common
shares.

Effective July 1, 2009, the
Company adopted ASC 820-10-55-23A, Scope Application to Certain Non-Financial Assets and Certain Non-Financial Liabilities,
delaying application for non-financial assets and non-financial liabilities as permitted. ASC 820 establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. ASC 820 establishes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices
(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement
date. Financial assets and liabilities utilizing Level 1 inputs include active exchange- traded securities and exchange-based
derivatives.

Level 2 — inputs other
than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through
corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities,
non-exchange-based derivatives, mutual funds, and fair-value hedges.

Level 3 — unobservable
inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement
date. Financial assets and liabilities utilizing Level 3 inputs include infrequently- traded, non-exchange-based derivatives and
commingled investment funds, and are measured using present value pricing models. The company values the conversion liabilities
using the Black-Scholes model and the assumptions are updated using independent data such as the risk free rate, volatility and
expected life for each valuation date based on changes over time.

The following table reconciles, for the three months ended
March 31, 2013, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated
financial statements:

Conversion Liability at January 1, 2013

$

13,797,679

Value of beneficial conversion features of new debentures

512,411

Change in value of beneficial conversion features during period

(614

)

Reductions in fair value due to principal conversions

-

Conversion Liability at March 31, 2013

$

14,309,476

The fair value of the conversion features are calculated
at the time of issuance and the Company records a conversion liability for the calculated value. The Company recognizes interest
expense for the recognition of the conversion liability.

17

Kiwibox.Com, Inc.

Notes to Financial Statements

16. GOODWILL FROM THE ACQUISITION OF KWICK!

The excess of purchase price
over tangible net assets acquired at September 30, 2011 was initially allocated to goodwill in the amount of $6,138,210. Due to
exchange rate fluctuation, the carrying amount of goodwill that resulted from the acquisition of Kwick increased in value, with
a total of $103,632 in unrealized appreciation from acquisition through March 31, 2013, thereby bringing the total goodwill at
March 31, 2013 to $6,241,842.

According to ASC 350-20, Intangibles-Goodwill,
an impairment test has to be carried out for Goodwill (related to a cash generating unit). We engaged an outside company to prepare
an impairment test for the intangible assets (including Goodwill) identified within the acquisition of Kwick by Kiwibox, which
became effective on September 30, 2011. The impairment test was carried out as of September 30, 2012, and is to be carried out
at least annually by the Company. In addition, the goodwill has been tested by the management of the Company in qualitative assessments
throughout the three months ended March 31, 2013. These assessments did not lead management to identify impairment indicators
related to goodwill.

17. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2013, the FASB issued
ASU 2013-05, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups
of Assets within a Foreign Entity or of an Investment in a Foreign Entity , which provides guidance on releasing cumulative translation
adjustments out of accumulated comprehensive income into net income when a parent either sells a part or all of its investment
in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit
activity or a business within a foreign entity. This guidance is effective prospectively for interim and annual periods beginning
on January 1, 2014. Early adoption is permitted. As the Company has not ceased to have a controlling financial interest in a subsidiary
or group of assets that is a business within a foreign entity, the adoption of this guidance is not expected to have a significant
impact on the Company's consolidated financial position, results of operations, or cash flows.

Management does not believe that any other recently
issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial
statements.

18. SUBSEQUENT EVENTS

During April 2013 and through
May 14, 2013 we received $180,000 of working capital from accredited investors, which are covered by convertible promissory notes.

In April 2013 an agreement was
reached with one investor to pay off two loans totaling $90,000 in principle plus interest over the next six months. Two payments
totaling $49,000 have been paid to date.

In April 2013 800,000 shares
of common stock were issued to the Chief Executive Officer as part of his contract that had been previously accrued.

The information in this annual
report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such Act
provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information
about their businesses so long as they identify these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the projected results. All statements other than
those statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry
prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect
management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s
expectations.

The following discussion and
analysis should be read in conjunction with the consolidated financial statements of Kiwibox.Com, Inc., contained herein and in
the Company’s annual report for the year ended December 31, 2012 as filed on Form 10-K. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will
necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment
of our management.

Description of Business

The company successfully acquired
the German social network Kwick! in the third quarter 2011. This acquisition adds more than 10 million registered members
with around 1 million active users, who create more than 2 billion page impressions a month in the Kiwibox network. This community
has been online since 1999 and has been cash flow positive since inception. We are continuing to optimize this website and develop
mobile applications to keep these users engaged across multiple platforms. We are presently increasing the number of events sponsored
in Germany as a way to bind our German members to our website.

The Company has successfully
integrated Pixunity to the US market and will continue to add impressive features throughout the year. At the same time we continue
to increase our market presence. Our promotional teams, both inside and outside of New York City, continue to develop partnerships
with event organizers and businesses along the East Coast of the United States and plan further expansion of these types of market
alliances throughout 2013.

The Company will continue focusing
on growth through acquisition and explore new language markets, and expects to start another due diligence process in the next
six months.

The Company attaches great
importance to its innovative technology developments and continues to follow the top social network market leaders with technology
upgrades, providing its users with an alternative social networking opportunity in the web and through mobile apps.

Based on the integration work
the operating expenses, not including stock-based compensation, are at a level of approximately $120,000 per month. We expect
income received as a result of the recent acquisition to minimize or wave the funding needed from existing investors (see sections
“Loans and Notes Payable”).

Overall, we have equipped the
entire website with the newest state-of-the-art advertising features which enable sponsors to self-direct their message to specific
target audiences based on gender, age, geographic region, education, and interests. That also included a Google optimization with
privacy options which improves Google search results. Special attention was given to end up with a scaleable and highly
redundant system that can accommodate future growth. One of the most important features of a social network website is the
Search and “be found” function. Here we completely updated our member search function to facilitate friends searches
and establish networks of users on a global basis.

19

The Company continues to look at cost cutting measures
at its Kwick subsidiary and expects the subsidiary to return to profitable after the integration-process is completed in
the second quarter 2013.

Results of Operations for the Three Months
Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012

For the quarter ended March
31, 2013, total revenues amounted to $316,800, compared to $423,979 recorded in the first quarter in 2012. The decrease is solely
due to the operations of Kwick!.

Gross profit (loss) for the
quarter ended March 31, 2013 amounted to $84,094 as compared to $138,062 for the corresponding interim period in 2012. The decrease
is solely due to the operations of Kwick!.

After deducting selling and
general and administrative expenses of $443,648 for the first quarter ended March 31, 2013 compared to $672,597 recorded in the
same period in 2012, the Company realized an operating loss of $359,554 for the first quarter of 2013 as compared to an operating
loss of $534,535 for the same period in 2012. The decrease in operating expenses was the result of continued cost cutting measures,
including the consolidating of staffing to reduce payroll in the operations of Kwick!.

The quarter concluded with
a net loss of $1,104,156. After accounting for dividends accrued on outstanding preferred stock which totaled $12,816, the net
loss applicable to common shareholders was $1,116,972 or $0.002 per share compared to a net loss applicable to common shareholders
of $1,883,948 or $0.004 per share for the first quarter in the previous year.

Liquidity and Capital Resources

We have financed our business
with new debt since our cash flow is insufficient to provide the working capital necessary to fund our operations. We received
$145,000 in cash from short-term loans from accredited private investors during the quarter. We have an ongoing and urgent
need for working capital to fund our operations. If we are unable to continue to receive new equity investments or obtain loans,
we will not be able to fund our operations and we will be required to close our business.

Our deficit in working capital
amounted to $26,541,240 at March 31, 2013, as compared to $25,475,653 at December 31, 2012. The change is primarily attributable
the losses incurred in the first quarter of 2013. Stockholders’ equity showed an impairment of $20,076,615 at the end of
the period, compared to an impairment of $19,032,919 at the beginning of the year. The negative cash flow from operations during
the three months totaled $227,613 and was financed by new debt.

The Company had $11,459 of
bank debt as of March 31, 2013. Aside from trade payables and accruals, our remaining indebtedness at March 31, 2013 consisted
of certain notes and loans aggregating $9,599,014 and the following obligations. Amounts due to related parties were $82,087.
The liabilities from derivative conversion features were $14,308,476. The position “Obligations to be settled in stock”
of $270,778 accounts for common shares due under consulting agreements, and for services to be settled in common stock options
and warrants, where the underlying securities had not yet been issued. Current liabilities also include $645,944 accrued unpaid
dividends on outstanding preferred stock. Such dividends will be paid only if and when capital surplus and cash-flow from operations
are sufficient to cover the outstanding amounts without thereby unduly impacting the Company’s ability to continue operating
and growing its business.

Our current cash reserves and
net cash flow from operations expected during the near future will be insufficient to fund our operations and website development
and marketing plan over the next twelve months. We expect to fund these requirements with further investments in form of debt
or equity capital and are in ongoing discussions with existing investors to secure funding. There can be no assurance, however,
that we will be able to secure needed financing in the future and identify a financing source or sources, and if we do, whether
the terms of such financing will be acceptable or commercially reasonable.

Absent the receipt of needed
equity investment or loans, we will be compelled to severely curtail operations and possibly, close our business operations. Assuming
we can receive current funds to continue to operate our businesses, we may need additional funding for marketing and website development,
absent of which our website development, results of operations and financial condition could be subject to material adverse consequences.

20

Item
3.Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide
the information required by this Item.

Item 4T. CONTROLS AND
PROCEDURES

(a) Evaluation of Disclosure
Controls and Procedures.

The Company’s Chief Executive Officer
and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ended March 31, 2013 covered by this Quarterly
Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that, as
of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e)
and 15d-15(e) under the Exchange Act.

As of March 31, 2013, management assessed,
with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control over
financial reporting based on the criteria set forth in Internal Control – Integrated Framework for effective internal control
over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based
on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were
not effective as more fully described below. Based on management’s assessment over financial reporting, management
believes as of March 31, 2013, the Company’s internal control over financial reporting was not effective due to the following
deficiencies:

1. The Company’s control environment
did not have adequate segregation of duties and lacked adequate accounting resources to address non routine and complex transactions
and financial reporting matters on a timely basis.

2. The Company had a part time chief financial
officer performing all accounting related duties on site, presenting the risk that the reporting of these non routine and complex
transactions during the preparation of our future financial statements and disclosures may not be accomplished in a timely manner.
Additionally in September 2012 the Company hired a comptroller to assist the Chief Financial Officer.

Company management believes that notwithstanding
the above identified deficiencies that constitute our material weakness, that the financial statements fairly present, in all
material respects, the Company’s consolidated balance sheets as of March 31, 2013 and December 31,2012 and the related statements
of operations, stockholders’ equity, and cash flows for the quarters ended March 31, 2013 and 2012, in conformity with
generally accepted accounting principles.

Management’s Remediation Initiatives

In an effort to remediate the identified
material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following
series of measures:

- When available, we will devote additional
resources to supplement, where necessary, existing resources with additional qualified third party consultants;

- We are continuing to institute more
stringent approval processes for financial transactions, and

- We are continuing to perform additional
procedures and analyses for significant transactions as a mitigating control in the control environment due to segregation of
duties issues.

Changes in Internal Controls over Financial
Reporting

Other than as stated above, during the quarter ended March
31, 2013, there have been no changes in the Company’s internal control over financial reporting that have materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

21

PART II - OTHER INFORMATION

Item 1

LEGAL PROCEEDINGS

At the time of this
report, the Company is not a party in any pending material legal proceedings.

Item 1A.

RISK FACTORS

A smaller reporting company is not required
to provide the information required by this Item.

Item 2

UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS

a)

Issuance of unregistered securities

During the first quarter in
2013 the Company did sell any unregistered securities.

(b)

Not applicable

(c)

None

Item 3

DEFAULTS UPON SENIOR SECURITIES

The Company, as of the date
of this filing, is in arrears on the payment of certain dividends on its Series A, C, and D Senior Convertible Preferred Stock.
Such arrears total approximately $594,681. These dividends have been accrued, however, the Company’s management has refrained
from making payments at this time because of the absence of positive equity and/or surplus funds.

Item 4

SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

- None

Item 5

OTHER INFORMATION

- None

22

Item 6

EXHIBITS AND REPORTS ON FORM 8-K

(a)

Exhibits

31.01.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 16, 2013.

31.02.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, dated May 16, 2013.

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